After popping to as high as .7299 following the release of Australia’s bumper Q1 GDP report in Asia, the Australian dollar ground lower in overnight trade, eventually closing the session buying .7258.
While real GDP was strong, marking the fastest pace of economic growth seen in three and a half years, the internals of the report, particularly surrounding incomes and prices, were nowhere near as robust, something that did little to dispel the view of the vast majority in markets that a further rate cut from the RBA is still likely.
Along with weakness in commodity prices key to Australia, and despite weakness in the US dollar, it was enough to push the Aussie lower in European and US trade.
As at 8am AEST, the AUD/USD buys .7252, up 0.23% on Wednesday’s opening level. It is now oscillating around its 200-day moving average, something that technical traders will be watching closely.
After a hectic session for economic data on Wednesday, the economic calendar is equally as jam-packed today with a variety of market-moving events arriving both at home and abroad.
Domestically, markets will receive retail sales and international trade figures for April, something that NAB’s senior economist David de Garis believes will undershoot market expectations.
“NAB looking for lower growth in retail sales (0.2% after 0.4% in March) and the trade deficit to push up toward $2,700mn from $2,100mn in March,” wrote de Garis in his morning note.
“Our suspicion is that a further bout of discounting may have taken the edge off nominal sales growth, as would some further softness out of WA.
“As for the trade figures, gold exports are extremely volatile from month to month and were strong last month and due for payback. We also look for softer coal exports and a monthly dip in iron ore shipment volumes,” he added.
Later in the session, the ECB will deliver its June monetary policy statement while OPEC members meet in Vienna, something that saw the crude oil price recover earlier losses overnight.
“The ECB will be reviewing the OK growth performance and policy progress with its enhanced monetary accommodation announced and now being rolled out,” notes de Garis.
“OPEC is also meeting, presumably to review and give their tick of approval so far to their market share defence strategy even though there were wire reports overnight of an output ceiling.”
There is also a plethora of US labour market data scheduled with weekly jobless claims and the ADP employment report for May due out later in the session.
Markets will use both releases, particularly the ADP report, for clues as to what may arrive in the May US non-farm payrolls report on Friday.